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“Everybody is struggling with the total cost, which it appears could be bigger than the 2007 flood,” says AXA commercial director of claims and underwriting David Williams.

A tidal wave of claims

Insurance Times understands that AXA’s total liabilities resulting from the winter weather are roughly in line with the cautious estimate of £118m in its most recent set of results, published in February.

Chartered Institute of Loss Adjusters president Andrew Homewood agrees. “It’s the largest event of its kind in recent times,” he says, adding that what made the last December’s events particularly challenging was their duration. “It came twice and stayed for a long time,” he says.

In what Cunningham Lindsey UK chief executive Phil McNeilage describes as “a unique set of circumstances”, the industry had a “massive influx” of storm claims from late November followed by a tidal wave of freeze-related cases for the entire month of December.

Global warming in action

Amid the accumulating evidence of global warming, a spike in cold weather claims is probably the last thing that some in the industry were expecting.

However, according to certain climate scientists, this winter’s events are a by-product, albeit an unexpected one, of wider warming.

According to recent research, outlined at an Allianz briefing last week, the melting of the Arctic ice caps could be disrupting the operation of the Gulf Stream, the sea current that keeps the UK much warmer than it should be given its latitude.

The result is that severe weather during the last two winters might not be as rare as we think.

“We realise that we are going to get more varied, extreme weather events. It’s not just flooding,” says Williams.

It looks like insurers and loss adjusters will have to tighten up their plans for dealing with winter weather.

McNeilage believes that these winter events underlined the need for insurers to allow a greater proportion of claims to be logged online. Cunningham Lindsey now takes 21% of its claims online.

“It means we have more resources and can offer a better service to other customers as a result,” he says.

Policies need to change

But it is in the area of policy terms and conditions that there is likely to be a greater focus. The rise in winter weather claims over the last two years, coupled with the looming end of the statement of principles agreement for insuring flood risk areas, is increasingly calling into question ‘one size fits all’ approaches to household policies.

Ageas UK chief executive Barry Smith has said that insurers will need to change policy terms and encourage homeowners to manage risk to help deal with freezing weather.

Merlin loss adjusting services director Russell Crewe says a number of insurers are looking at ways to incentivise policyholders to do more up-front to nip claims in the bud.

He suggests that customers could receive higher excesses or deductibles if they lag their pipe work properly or install devices that monitor flow, triggering a valve that stops the mains supply if it is inconsistent, owing to a property being unoccupied, for example.

A tightening of conditions would also include ensuring that unoccupied properties are visited at least once every 15 days.

McNeilage suspects that such steps would not have protected pipes from the double-digit, sub-zero temperatures that affected the UK for much of last December.

Nevertheless, he agrees that the industry needs to take a more sophisticated approach to policies. “The ‘one size fits all’ approach really needs to be challenged.”